Gulnara Karimova

Uzbekistan is planning to introduce a new form of criminal penalty that appears tailor-made to wield against Gulnara Karimova, the disgraced daughter of strongman leader Islam Karimov, in due course.

Parliament is considering amendments to the criminal code that would allow the courts to sentence convicted offenders to house arrest instead of prison or other forms of punishment, MP Aliya Yunusova, told the legal news website Norma.uz on July 29.

House arrest is currently only applied as a form of pre-trial detention, but if the change is passed by Uzbekistan’s rubber stamp parliament — a foregone conclusion — it will be on the statute books as a penalty.

That could theoretically provide Karimov’s administration with a face-saving legal resolution to the saga of the disgraced Karimova, who has been held under house arrest since February 2014 but never charged with a crime (at least to public knowledge).

At first no explanation was given for her detention, but last September prosecutors said Karimova was under investigation on suspicion of involvement in organized crime and corruption.

Her associates Gayane Avakyan and Rustam Madumarov had been convicted in a related case, the prosecutors said. They are believed to be serving jail terms in Uzbekistan.

The two also feature in a Swiss money-laundering investigation in which Karimova is a suspect, which is linked to a Swedish probe into allegations of illicit payments in Uzbekistan’s telecoms sector.

The sudden move to introduce house arrest as a penalty may be a prelude to developments in Karimova’s case, such as filing formal charges against her with a view to bringing her to trial.

The US government wants to recover hundreds of millions of dollars in allegedly illicit funds that American prosecutors contend enriched a “close relative” of Uzbekistan’s strongman president, Islam Karimov.

A forfeiture complaint filed in US federal court in New York seeks the recovery of $300 million in assets “involved in an international conspiracy to launder corrupt payments” made in Uzbekistan’s telecoms sector, according to a copy of the complaint sent to EurasiaNet.org by the Department of Justice, which filed the case on June 29.

It alleges that illicit payments were made by two telecoms companies, Russia’s MTS and Amsterdam-based VimpelCom, to curry influence and secure favorable decisions from Uzbekistan’s government to operate in the lucrative telecommunications sector.

The alleged beneficiary is not named, but is identified as “GOVERNMENT OFFICIAL A,” and is further characterized as “a close relative of the President of Uzbekistan.” The unnamed beneficiary “held several positions in the Uzbek government” during the period in question (2004-2011), according to the complaint.

Gulnara Karimova, the president’s eldest daughter who is under house arrest in Uzbekistan on corruption charges, has previously been named as a suspect in a money-laundering probe in Switzerland involving payments in Uzbekistan’s telecoms sector. During the period in question, she held government positions, including as deputy foreign minister and ambassador to Spain and the United Nations in Geneva.

The lawsuit names two Karimova associates, and two shell companies they allegedly operated to funnel illicit funds: Gayane Avakyan, owner of Takilant, and Rustam Madumarov, owner of Expoline.

Gulnara Karimova, the daughter of Uzbekistan’s strongman leader Islam Karimov, has been making international headlines for years amid charges of massive bribery and corruption. But fresh evidence unearthed by an anti-corruption watchdog suggests her avarice reached mind-boggling scales as she vacuumed up cash from telecoms companies wanting a slice of Uzbekistan’s lucrative cellphone pie.

Karimova received over $1 billion in payments and shares from Scandinavian and Russian telecoms companies such as TeliaSonera, Telenor, MTS, and Alfa Telecom, the Organized Crime and Corruption Reporting Project (OCCRP) alleged in a report published March 21.

“Her audacious schemes may have cost the people of Uzbekistan money that could have paid for pensions or healthcare but instead went into banks, an offshore hedge fund and luxurious real estate around the world, including a castle in France and a penthouse in Hong Kong,” the OCCRP stated.

The watchdog was skeptical of the defense put forward by telecoms firms that they did not knowingly commit any wrongdoing: “While the international companies involved claim to have been innocent or unwilling dupes of her maneuvers, the blatant means by which Karimova allegedly operated made it virtually impossible for those involved not to realize they were giving in to extortion and bribery.”

Fresh allegations have emerged of bribery in Uzbekistan’s telecoms market involving another Nordic company and Gulnara Karimova, the daughter of President Islam Karimov.

A cellphone company partly owned by Norway’s Telenor is alleged to have paid some $25 million in kickbacks to acquire telecoms licenses in Uzbekistan, AFP reports, citing the Klassekampen daily.

The funds were reportedly transferred from Amsterdam-headquartered Vimpelcom, the operator of the Beeline brand in Uzbekistan, to the infamous Takilant Limited company, which is at the heart of two separate graft probes in Europe. Takilant is involved in a money-laundering probe in Switzerland (in which Karimova is a suspect), and also a bribery probe in Sweden involving another Nordic telecoms giant, TeliaSonera.

“Bank statements document how the money was transferred from a previously unknown company in the British Virgin Islands as Vimpelcom purchased licenses to the mobile market in the former Soviet state,” AFP quoted Klassekampen as saying.

Telenor responded that it has “zero tolerance for corruption, both when it comes to our own operations and also to the companies that we are part owners in.”

“We are a minority shareholder in Vimpelcom, so it’s up to Vimpelcom to take responsibility for answering any questions that relate to their operations,” Telenor communications head Glenn Mandelid told AFP.

Vimpelcom, which is 33 percent owned by Telenor, told EurasiaNet.org by email that there is nothing new in the information that has emerged.

Photographs released by Karimova’s London-based spokesman, Locksley Ryan, on September 16 show what appears to be a tense standoff between the president’s daughter and her captors.

President Islam Karimov’s 16-year-old granddaughter is not being held against her will in Uzbekistan, prosecutors have announced, and she is free to leave the residence where her mother, Gulnara Karimova, is under house arrest.

Iman Karimova, an American citizen, “has no relation to the criminal cases under investigation” and there is no “restriction of her rights or legitimate interests, including freedom of movement,” the General Prosecutor’s Office said on September 22.

She is free to go anywhere at any time, including abroad, the prosecutor’s office said in a posting on its website which it described as a response to unspecified media queries. It also confirmed that Iman, who was born in the United States, has the right to her U.S. citizenship.

Iman has been in the Tashkent residence for six months with her mother, who was unofficially placed under house arrest in February and named a suspect in a multi-million-dollar mafia-style corruption case earlier this month.

Forty-two-year-old Gulnara Karimova, who was once seen as a potential successor to her aging father, has stated in letters and recordings leaked to the media that she is being held against her will.

“The territory of the house is basically surrounded now by hundreds of cameras and special equipment which is blocking any means of communication,” she said in recordings leaked to media, including EurasiaNet.org, earlier this month.

Karimova spoke of “tremendous pressure and stress” on herself and her “struggling sick daughter.” Both “need medical help urgently,” she added, for a heart condition in Iman’s case.

A cement company owned by Russian oligarch Filaret Galchev appears to have become the latest target of an assets grab by Uzbekistan’s government, sparking speculation that this is part of a re-division of economic spoils following the fall from grace of Gulnara Karimova, the daughter of President Islam Karimov.

A Tashkent court has ruled that the post-Soviet privatization of the Akhangarantsement company – owned by Galchev’s Russia-based Eurocement – way back in 1994 was illegal, and froze assets worth 414 billion sums (nearly $180 million), the company said in a July 29 statement.

The claims of illegal privatization “are of an unfounded and illegal nature, as was convincingly demonstrated in the court hearing,” it quoted Mikhail Skorokhod, Eurocement’s president, as saying.

The assault on the firm was quite sudden, he said: The company found out about the lawsuit brought by the government’s antimonopoly committee on July 16. Hearings started two days later, and on July 21 the court deemed the privatization illegal.

The ruling effectively places the firm – Uzbekistan’s second largest cement producer – back in the hands of the state, a full two decades after it was put into private hands in the post-Soviet privatization rush.

Eurocement – whose owner, Galchev, is Russia’s 24th richest man with a fortune of $6.1 billion, according to Forbes – acquired a 75-percent stake in Akhangarantsement in 2006 and now owns an 84-percent share, with the rest in the hands of minority shareholders.

Amid reports that two close associates of Gulnara Karimova, the embattled daughter of Uzbekistan’s strongman president Islam Karimov, have been jailed, a man claiming to represent her family has denied allegations of her involvement in bribery and money-laundering in Europe. The spokesman suggests the root of her troubles could be political infighting ahead of next year’s presidential election.

“There has been no proof to back up any of the claims made against Gulnara Karimova,” the spokesman – who works for a recognizable London-based communications firm, but insists that neither he nor the firm be identified – said in the statement, sent to EurasiaNet.org by email on July 14.

“However,” he continued, “given her relationship to the president of Uzbekistan, we cannot ignore the likelihood of these allegations against Gulnara Karimova being politically motivated ahead of the forthcoming 2015 elections.”

Karimova, a one-time powerful player previously tipped as a possible successor to her father, has reportedly been under house arrest in Tashkent since February. This follows a vitriolic family feud with her mother, Tatyana Karimova, and younger sister, Lola Karimova-Tillyaeva.

As well as her mother and sister, Karimova has blamed Rustam Inoyatov, the head of Uzbekistan’s domestic intelligence service (known as the SNB), for her woes. In an interview with Russia’s REN TV last month, her son (called Islam after his grandfather) blamed unnamed “powerful” figures for arranging the detention of his mother and 16-year-old sister Iman in Tashkent.

Four months after the precipitous downfall of Gulnara Karimova, the eldest daughter of Uzbekistan’s strongman leader Islam Karimov, the most visible arms of her former business empire still stand shuttered in Tashkent – although some enterprises are slowly coming back to life under different management.

Karimova has reportedly been under house arrest in Tashkent since February, after coming off worst in a power struggle with the influential head of Uzbekistan’s domestic intelligence service, Rustam Inoyatov, and her own mother Tatyana Karimova and younger sister Lola Karimova-Tillyaeva.

Nothing has been heard from the once powerful president’s daughter for three months, when she apparently smuggled a letter out to media complaining of ill treatment at the hands of her captors.

When the authorities isolated Karimova in February, businesses associated with her in Tashkent, where she had fingers in many pies (from telecoms to retail and entertainment), were abruptly shuttered.

Karimova’s face still stares down from the window of one outlet on Sadyk Azimov Street in downtown Tashkent, a once bustling DVD, CD, and computer game store that was part of a chain called Nirvana. The poster advertising the president’s daughter in her pop diva persona, Googoosha, remains, although the store stands closed and Googoosha’s songs have disappeared from the airwaves.

This poster is one of the few public signs left of the business empire presided over by Karimova, who once had such an appetite for swallowing up rivals’ interests that American diplomats dubbed her a “robber baron.”

Nordic telecoms giant TeliaSonera is at the heart of several international corruption probes involving its activities in Uzbekistan. Now it says it may have broken the law in neighboring Kazakhstan and other countries, as well.

An external review of TeliaSonera's dealings in five countries has found that “several transactions, and actions during [2007-2013] have been conducted in a manner inconsistent with sound business practice and TeliaSonera’s ethical requirements,” board chair Marie Ehrling told an Annual General Meeting on April 2.

“It cannot even be ruled out that certain conduct has been in violation of the law,” she said.

The review, commissioned last April and conducted by international law firm Norton Rose Fulbright, covered Nepal, Kazakhstan, Azerbaijan, Tajikistan, and Georgia but focused mainly on the first three countries.

Ehrling did not specify which transactions may have been unethical or illegal, but said the review mainly concerned the “establishing of operations and acquisitions of companies and licenses.”

Areas of concern included “substantial payments to advisors and intermediaries for, among other things, lobbying activities; lack of control of business partners; and inadequate handling of warning signs.”

“One area singled out is the inadequate governance of the Eurasian operations,” Ehrling said.

After a spectacular, months-long campaign to discredit her mother, her sister, and Uzbekistan’s secret police boss, the elder daughter of Uzbek strongman Islam Karimov went silent in mid-February. Reports that Gulnara Karimova has been held against her will could not be independently confirmed, but she’s been unavailable for comment as prosecutors in two European countries have named her as a suspect in corruption investigations.

Now the BBC says it has received a letterthat appears to be from Karimova. In it, the author claims she is under house arrest in Tashkent and has been beaten by men working for her notoriously brutal father.

"I am under severe psychological pressure, I have been beaten, you can count bruises on my arms," reads the letter, apparently smuggled out, which the BBC reproduced in part on March 24. "How naive I was to think that the rule of law exists in the country.”

A graphologist specializing in Cyrillic handwriting told the BBC that there is a 75 percent chance the unsigned letter was written by the scandal-plagued Karimova, Uzbekistan’s former ambassador to the United Nations, who describes herself on her website as a “poet, mezzo soprano, designer and exotic Uzbekistan beauty.”

"I never thought this could happen in a civilized, developing nation that Uzbekistan portrays itself as," the letter says, complaining of "Pinochet-style persecution."